• Germany's news in English
 

Merkel's bailout fund hits 'stumbling block'

Published: 22 Jun 2012 12:21 GMT+02:00

German lawmakers are due to ratify both the pact and the bailout fund on June 29, but President Joachim Gauck's decision to delay signing meant the planned timing for the European Stability Mechanism (ESM) bailout fund to enter into force on July 1 would no longer stand.

Many in the German media supported Gauck's decision to give the Constitutional Court up to three weeks to consider a legal challenge put forward by the far-left Linke party.

In doing so, the President had skilfully "avoided an unprecedented constitutional conflict,” the Süddeutsche Zeitung said on Friday.

By buying the court enough time to properly examine the challenge, both Germany's highest institutions could "escape the accusation of destroying the Euro with a rushed decision."

And given what is at stake for Germany, more scrutiny of the the planned ESM permanent bail out fund cannot be a bad thing, said the Münchner Merkur.

After all, Germany will be responsible for 27 percent of contributions to the ESM fund - expected to contribute €21.7 billion in cash and provide guarantees worth a further €168.3 billion.

It is for the ESM "that Germany has got itself up to the neck in financial adventures," the Munich-based paper added.

Daily paper Die Welt also showed sympathy with the President, who it said had taken a "political risk" when called upon to address "the core question of how German democracy and European politics can coexist in peace."

"In the case of the bail out law, Gauck alone has the answer and also the responsibility. Only his signature gives it legal force in Germany."

It is at times like this, said the paper, that Presidents show their "enormous power," which is enough to challenge even the will of the Chancellor.

And the move is indeed a further blow for Chancellor Merkel, whose "room for manoeuvre is getting smaller," said the left-leaning, Hannover-based Neue Presse.

Having - after long negotiations - finally succeeded on securing support from the opposition parties for the fiscal pact on Thursday, Chancellor Merkel was immediately dealt another "stumbling block," wrote the paper.

Chancellor Merkel - and those looking to rescue the euro - had been hoping for a "strong signal from Germany" said mass-circulation daily Bild. Instead, all they got was "a hammering" from the Constitutional Court.

The Local/DPA/jlb

The Local (news@thelocal.de)

Your comments about this article

15:41 June 22, 2012 by Bushdiver
This is something that should have happened a long time ago. The idea of just throwing money away has to be regulated. Merkel hands out money like clowns hand out balloons at a party. If Germany would not be up to their necks in loses should the EU and Euro fail they would probably just let this collapse.
14:01 June 26, 2012 by Leo Strauss
Speed bump on the Autobahn to national insolvency.
12:21 July 5, 2012 by AlexR
"Germany is not bailing out Europe, it is rescuing itself"

The ECB and eurozone governments, as well as bailing out other members states, have quietly been rescuing German banks and, by extension, German savers. Without these emergency operations, the eurozone would have broken up, German banks would have gone bust and the savings of many ordinary Germans might have been wiped out. More likely the German taxpayer would have had been forced to bail out those banks.

So, as the German people distribute blame for the situation in which they find themselves, they should not ignore their own bankers. If those institutions had not made these investments and financed the current account deficits of Germany's neighbours for so many years, their country would not be on the hook for hundreds of billions of euros of bad debts.

Yet this is something German politicians refuse to acknowledge.

h--p://www.independent.co.uk/news/business/comment/ben-chu-germany-is-not-bailing-out-europe-it-is-rescuing-itself-7912743.html
22:23 July 9, 2012 by ceterum censeo
Great, there was no man in Germany to stop Hitler but wish President Joachim Gauck is the man to stop Merkel.

The euro crisis is man-made by Merkel and Sarkozy, who intervened into Greek insolvency, likely to help some German and French mismanaged banks out from their liability.

All and any banks willingly help anybody to get indebted too much if the credit liability is by political decision taken to the taxpayers. Prudent and responsible management of public or private funds is not made by agreements of any kind but with the controlled money supply. When the banks bear their credit responsibility, they shut off the money supply in time. This is the only way and one of the fundamental principles of the economy. European Stability Mechanism (ESM) is just the opposite, to break the principle of good management, in fact a radical neocommunist idea.

The Greek debt is 30% over the GDP and such a debt has never been paid anyone else but the inflation. Greece is a sovereign state, which bankers cannot execute by an auction. It can simply stop paying the debt but is wise Greece shall pay its debt to the last cent with 30-year bonds. Along the time, the Inflation will erode the real value of these bonds to the loss of the creditors but their books stay sound, as the bonds are long term receivables. No crisis will be anywhere. You have not even heard about the case in 1987, when Brazil paid its outstanding foreign public debt this way. The inflation of dollar made the real value of these bonds in 2006 to be at 20% of the face original value and Brazil paid them in advance.

Having no new credit available, but old debt "frozen" at least for 30 years in bonds, Greece must and can adjust its economy without any social crisis.

European Stability Mechanism (ESM) and all related measures shall be annulated, the EU governments shall each focus in managing and ruling of their own countries, let the market economy work free and EU shall continue its valuable service as an platform of cooperation between the independent member nations, being in service, but not in charge.

There is no reason to anyone get out of euro, not to expel anyone of it, unless someone starts issuing counterfeit money and destroy its value by inflation.

Euro is just a monetary unit to measure the value of goods and services, as meter is a unit to measure the length and kilogram to measure the weight. We may substitute any of them with new ones, but the things will no be changed.

Merkel and Sarkozy made fatal mistakes and may not have the character to admit and retreat. Thanks Frenchmen, Sarkozy is now out and thanks President Joachim Gauck, Merkel will go.
18:51 July 11, 2012 by Vultch
At Alex R

Germany is indeed rescuing Europe, when banks loan money to countries (buy bonds) the is an agreement that the money will be paid back. If said countries are run by buffoons whose grasp of economics would make a third world dictator blush - being dictated by backhanders/bribes then its up to the countries respective populations to act and vote the clowns out. I find it ridiculous to blame the lenders..they were lending to governments not crack addicts living in Glasgow.
16:09 July 14, 2012 by luckylongshot
The fundamental problem with the ESM is that trying to solve the problem of too much debt with even more debt cannot actually solve the problem. What is needed to fix the problem is debt reduction to the point where the weak economies in Europe can function profitably. With this in mind it seems cleaar that the ESM is just a technique to transfer mountains of bad debt from the banks to the public. My hope is that the President realises this and kills the ESM and this leads to an initiative that can actually help solve the crisis emerging. What is on the table now only benefits the bankers.
22:25 July 30, 2012 by friedenstempel
The Karlsruhe judges will save us.
Today's headlines
'Blackfacing' is Anglicism of the Year
They may be collecting for charity, but this is not really OK. Photo: DPA

'Blackfacing' is Anglicism of the Year

"Blackfacing", used by Germans to describe white people painting their skin dark to mimic black people, has been named Anglicism of the Year by a jury of linguists. READ  

Cocaine-cop trial shakes Bavarian Alps
File photo: DPA

Cocaine-cop trial shakes Bavarian Alps

For 20 years no-one noticed that the head of the drug squad in Kempten, Bavaria, was on a personal rampage of narcotics- and domestic abuse - until his wife shopped him for the €250,000 brick of cocaine he had stashed. But the local population isn't buying the story. READ  

Merkel wishes Tsipras 'strength and success'
Photo: DPA

Merkel wishes Tsipras 'strength and success'

Chancellor Angela Merkel congratulated Greece's new Prime Minister Alexis Tsipras on Tuesday and wished him "much strength and success" after his anti-austerity party's election victory. READ  

Refugees suffer over 200 attacks in 2014
Swastika graffiti at a refugee home in Bavaria with text reading "No asylum seekers". Photo: DPA

Refugees suffer over 200 attacks in 2014

Refugee NGOs' first annual report on violence against asylum seekers found that there were over 200 attacks on people and accommodation in 2014. READ  

'No German identity without Auschwitz'
President Gauck addressing the Bundestag on the 70th anniversary of the liberation of Auschwitz. Photo: DPA

'No German identity without Auschwitz'

President Joachim Gauck on Tuesday warned Germans against drawing a line under the Holocaust as the Bundestag (parliament) opened a day of commemorations on the 70th anniversary of the liberation of Auschwitz. READ  

Handball! Neuer blows whistle on wax double
Manuel Neuer at the inauguration of his double in Berlin. Photo: DPA

Handball! Neuer blows whistle on wax double

Madame Tussauds' hottest new effigy was unveiled to the public in Berlin on Tuesday, costing a euro for each of the 150,000 hairs on keeper Manuel Neuer's head. Pity about the handball goal frame though… READ  

Railway union threatens strike over €2
EVG members outside a station during a 2013 strike. Photo: DPA

Railway union threatens strike over €2

As railway operator Deutsche Bahn (DB) continues negotiations with train drivers' union GDL, its other major union EVG has threatened a strike over pay differences between employees. READ  

Dresden tolerance concert draws 22,000
Photo: DPA

Dresden tolerance concert draws 22,000

As Pegida supporters and opponents clashed in Hanover, musicians threw a free concert in central Dresden on Monday evening to show another side to the city famous for spawning the anti-Islam movement. READ  

Germany remembers horror of Auschwitz
"Work will set you free," the gate at Auschwitz-Birkenau tells inmates. Photo: DPA

Germany remembers horror of Auschwitz

Chancellor Angela Merkel joined survivors of the Auschwitz-Birkenau concentration camp in Berlin on Monday to open a series of events dedicated to the end of the Holocaust camp regime 70 years ago. READ  

JobTalk Germany: Entrepreneur series
'Work I love and a rewarding family life'
Working mum photo: Shutterstock

'Work I love and a rewarding family life'

Melanie Fieseler is a British business/career consultant and coach, and founder of Berlin-based WorkSmart. She is on a mission to help ambitious mums like herself successfully combine motherhood with building a fulfilling and rewarding career or business. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
Business & Money
FATCA: 'The age of financial privacy is over'
Gallery
The best regional foods TTIP opponents want to protect
Photo: DPA
Features
The rise and spread of Pegida
Photo: Shutterstock
Culture
This cosplayer did not think his plan through
National
Europe in statistics - from Spain to Sweden
Photo: DPA
Politics
The Local's report from Pegida's largest ever demonstration.
Sponsored Article
Top-notch tech boosts bilingual schools
National
Six stories that will rock Germany this year
Photo: DPA
National
Terror alert at a new high. Should you be worried?
Dresden skyline and river by night. Photo: DPA
Politics
What does Dresden have against Muslims?
Photo: DPA
National
What were your favourite news stories of 2014?
Gallery
Top 12 German idioms
National
Why has The Local got a new logo?
Photo: DPA
National
This German was abducted and tortured by the CIA
Culture
10 top tips for partying in Germany
Photo: DPA
Technology
What does the Chancellor see as the future of the internet?
Photo: DPA
Berlin
The Local's series on 25 years since the fall of the Berlin Wall
Photo: DPA
Business & Money
JobTalk: All you need to know about working in Germany
National
Share news tips with The Local Germany
Latest news from The Local in Austria

More news from Austria at thelocal.at

Latest news from The Local in Switzerland

More news from Switzerland at thelocal.ch

Latest news from The Local in Denmark

More news from Denmark at thelocal.dk

Latest news from The Local in Spain

More news from Spain at thelocal.es

Latest news from The Local in France

More news from France at thelocal.fr

Latest news from The Local in Italy

More news from Italy at thelocal.it

Latest news from The Local in Norway

More news from Norway at thelocal.no

Latest news from The Local in Sweden

More news from Sweden at thelocal.se

1,788
jobs available
Toytown Germany
Germany's English-speaking crowd